[Solved] Refer to the Information in the Previous Question

Question 146
Multiple Choice

Refer to the information in the previous question.Assume that the UFL anticipates that,in addition to receiving the $1 million license fee,it will receive a bonus of $2 million in year 1 of the contract and a bonus of $3 million in years 2-4 of the contract based on Tank-Skin's sales.Also assume that the UFL is convinced that it is probable there will not be a significant reversal of any revenue recognized with respect to the bonus in subsequent periods.At the inception of the contract,what is the amount of transaction price that the UFL would estimate with respect to this license arrangement?

A)$0
B)$1,000,000
C)$3,000,000
D)12,000,000

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